Study Finds No Safety Benefit to ‘Alcohol Control’ Distribution Regulations

Published May 22, 2012

Eighteen states are categorized as “control” states for the way they regulate alcohol distribution. This means the state monopolizes some portion of sales of alcoholic products such as hard liquor.

A new study by the Mackinac Center for Public Policy in Michigan shows, despite the pleadings of special interests that benefit from these price-raising restrictions, they do not necessarily lead to greater public health and safety as measured by alcohol-attributable deaths.

“Alcohol Control Reform and Public Health and Safety” is particularly timely for the Great Lake State, because Gov. Rick Snyder (R) and the Michigan Legislature may soon take up some modest reforms of the state’s alcohol control regime. Already, beneficiaries of the status quo are pushing their claims that deregulation may harm public health and safety.

Dubious Safety Benefits

The study examined the reform opponents’ health and safety claims in detail.

It divides “control” states into three levels of control: heavy, moderate and light. In heavy control states, the state itself sells at least two of the three major types of alcohol at retail (beer and wine, for example); moderate control states sell only one type at retail and at least one at wholesale (liquor, for example) and light control states sell one or more types but only at the wholesale level.

In addition to the 18 “control” states there are 32 “license” states, where manufacturers, wholesalers and retailers are required only to obtain a license to do business. License states were also examined, and the alcohol-attributable deaths per 100,000 people were compared. Alcohol-attributable death is probably the broadest measure of alcohol-related harm categories.

Little Difference

The study found little difference in alcohol death rates regardless of the level of regulatory control. In fact, the average alcohol-attributable fatality rate was actually lower in license states (28.46 vs. 29.95 per 100,000 people) than in low control states such as Michigan. The result is the same when teasing out just the fatality rate for individuals under age 21. Of the 10 states with the lowest fatality rates, eight were license states, according to the study.

The study also reviewed recent scholarly literature to assess the idea that greater retail density (more liquor stores) causes more alcohol-related problems. A 2010 study from a University of Michigan doctoral candidate found, among other things, “for both men and women, higher density of alcohol establishments was related to lower alcohol consumption (quantity/frequency), binge drinking, and drink/driving.” Hers is not the only study to come to that conclusion.

The new study is not the Mackinac Center’s first state control-related analysis. Last year the Center looked at alcohol code length (by word count) for every state, comparing this with alcohol prices. Code length was considered a proxy for the degree to which a state controls alcohol distribution.

More Regulation, Higher Prices

The findings indicated a positive relationship between code length and price — more words in the liquor code are associated with higher retail prices. Specifically, for every 10 percent increase in code length there was an associated 3.2 percent increase in the average price of beer and a 10.4 increase in the average price of hard liquor. This analysis controlled for other variables that might also influence prices, such as the proportion of heavy drinkers in a state and the percentage of people employed in the leisure industry.

The study also found price differentials between control states and license states for spirituous liquor ranging from 3 percent to 6.3 percent depending on how the price of liquor was measured (and excluding the code length variable). 

The research strongly suggests that that people in control states are paying a premium and in return receiving no real advantages in public health and safety.  The study authors argue the public might be better served if lawmakers were to dismantle their control apparatus in favor of some other harm-reduction strategy.

Michael D. LaFaive ([email protected]) is fiscal policy director at the Mackinac Center for Public Policy in Midland, Michigan.

Internet Info

“Alcohol Control Reform and Public Health and Safety,” Mackinac Center for Public Policy: